Power Webinar in Review: Coal Still Leads in Global Spending

In last week's webinar on global spending in the Power Industry, Britt Burt, Industrial Info's vice president of research for the Power Industry said that there was more than $1.1 trillion of power projects under construction, with more than $5.4 trillion in the planning and engineering stage. East Asia, with $368 billion under construction, leads in terms of value, followed in a distant second by North America, with $113 billion in spending. The coal-fired sector, with about $661 billion in construction planned in the next 24 months, leads other fuel types in terms of investment value.

Coal

Coal accounts for 24% of spending in the global Power Industry. China, East Asia's largest spender, accounts for most of the world's coal-fired spending, but Burt noted that China had cancelled about 100 coal-fired power projects as the country attempts to scale back its use of the fuel. "However, there are locations where coal is a very needed fuel choice. I think India's still going to trend heavily toward coal. ...We see growing demand in places like Southeast Asia where coal is plentiful, and the price for the fuel is so attractive. I think we're going to continue to see development along those lines." While much of the Western world may be pushing coal out for environmental reasons, the East still continues to bring coal into the leading global position for power spending.

Natural Gas

"I think [natural gas] is going to be an important key to supplying future base load capacity," said Burt. "In the States, we've seen a lot of the retired coal capacity being replaced by natural gas-fired facilities." Burt said the ability to import liquefied natural gas (LNG) is a key to the build-out of natural gas capacity in Asia, Europe and the Middle East. The U.S., with more than $54 billion in planned natural gas projects in 2017-18, leads the world for natural gas build-out.

Nuclear

Burt said the abundance of natural gas is hindering the development of nuclear development in the U.S., and that natural gas would probably have to be priced at $7 or above per million British thermal units for nuclear buildout to become more feasible in the U.S. "As far as Europe, it really depends on the country. We see Germany moving from nuclear. Switzerland has said that they're phasing out nuclear generation in favor of renewables. But we do see development in other parts of Europe for new nuclear capacity, primarily the U.K." Burt said one-seventh of the world's nuclear capacity is 40 years old or older and need of modernizations, and that big modernization projects are in development around the world. "I think if we're going to meet the goals set out for decarbonization set out by the Paris Accord, then we will certainly have to see more nuclear capacity being developed going forward."

Wind

Wind remains the highest-value category for renewable energy spending. Burt said wind remains a mixed bag depending on the location. Many parts of the world continue to subsidize wind, but these are being rolled back in many areas, although renewable energy standards continue to increase.

Solar

While spending for solar is less than wind, it's capacity continues to grow. "We've seen massive buildouts over the past few years in Europe and China. India has some very aggressive [solar] goals of about 100 gigawatts (GW) of solar capacity by 2020." Burt said that the Investment Tax Credit in the U.S. continues driving solar capacity and similar incentives existed in other parts in the world. Burt said while solar prices had gone down, tax credits and incentives would remain necessary for solar to continue to be built out.

Hydro

Hydropower accounts for 80% of renewable energy throughout the world. "As we move forward to meet targets and goal for decarbonization, hydro is going to have to continue to play a larger role," said Burt. Like nuclear, many hydropower installations are decades old, and modernization programs are prevalent. "Over the next seven to eight years, we're moving to where hydro is supplying about 1,300 GW globally. I think that's a healthy potential for this sector of the industry."

This webinar is part of a series of regular webinars given by Industrial Info on a variety of industry topics. Too view this and other webinars, visit Industrial Info's webinar library.